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Morph of a Nerd CEO – How Hard Will You Work?

Nerds are used to long hours.  But the long hours you spent getting a program to work are nothing like the hours you’ll have to put in if you start a company and have employees. If you’re not prepared to work twelve hours at least six days each week – or if your family is not willing to have you work these hours, don’t start hiring employees.  The greatest demands on your time come in the period when you’re between two and ten employees; but it doesn’t let up much after.

The motto of Fractals of Change is that “nothing great is accomplished without irrational enthusiasm.” That’s in a large part because you need the irrational enthusiasm to get you through the unreasonable amount of work you’ll need to do.

As I posted previously, management is harder than doing everything yourself. But, when you hire the first employees, you’re still doing a lot yourself AND you’re managing them. In the good old days (as you’ll soon think of them), you could go on a 72 hour programming binge and then sleep it off for twenty four hours. Can’t do that when you’re also a manager because you have to be available to your people. Can’t lock yourself in your room for long periods of time and brook no interruptions. Can’t disappear to recover.

You hire the first employees because you want to do more than you could do by yourself and/or you want to build a “real company” – something that accrues value beyond just the earning power of a sole practitioner.  So you take on more work to capitalize on (and support) the new employees.  If you stop doing everything except managing, the company will have less actual capacity than it had before you made the hires unless you had enough funding and enough chutzpa to hire a dozen new people and some middle management all at the same time.

So you have to do solo work in an atmosphere which brooks interruption, you have to plan the future of your company, and, hardest of all, you have to manage. Moreover, unless you can afford to be in a pure development stage, you have to sell more than you ever did before because there are more mouths to feed.  Even if your product is not ready to go to market, you have competition to keep track of, shifting technologies, and you should be preparing the market for your entry.  Oh yeah, and you may have investors and/or bankers to deal with.  You’re very, very busy and you don’t get any long vacations either.  Email and even more instant communication assures that you don’t stop working even when you leave the office.

This post was triggered by a correspondent asking how hard a startup CEO should plan to work and what hints I have from my experience on relieving the workload.  There are a few workload management techniques which are important but they don’t substitute for long hours, they just make the long hours more productive. Here’s a few suggestions:

  1. Make decisions fast.  You’ll never have all the information you need.  You can’t spend time going over the same arguments again and again.  Just decide and move on to the next subject.
  2. Never waste time justifying past decisions or trying to rescue failures. If you were wrong (it’ll happen often if you obey rule #1), admit it, correct it, and move on.
  3. Get rid of ineffectual people immediately (really a subset of #2 since you made the decision to hire them).  At startup phase you must make time to mentor the best but you can’t correct the rest.
  4. If you open an email, answer it or dispose of it in some other way (the modern equivalent of the clean desk rule).
  5. Seek out – don’t hide from – bad news. The longer a situation goes uncorrected, the harder’ll it’ll be for you to fix.
  6. Delegate (note that this is only #6 but maybe that tells you something about me). Don’t let people delegate back to you the hard parts of what you delegate to them.
  7. Always check both that instructions are understood (repeating them back is good) and that they’ve been followed. You don’t like to be checked up on but you need to check up on everybody else.
  8. Give others leeway to make their own mistakes (needs to be balanced with #7).
  9. Ruthlessly triage prospects and opportunities.
  10. Be scrupulously honest.  Even exaggerations and half-truths are hard to remember and end up taking more time to correct than it would have taken to tell and perhaps defend the truth. Moreover, once people trust you, they won’t waste your time or theirs checking on what you say.

More posts in this series:

Sick Days are Sick

The Power of Silence

First Sole Practitioner

Yuk, Selling

The First Employees

The Close

When Free is the Right Strategy

Vermont Legislature Advances E-State Initiative, Next Step Natural Resources

H.248, the bill which can make Vermont the nation’s first e-state, took a significant step forward when the Commerce Committee of the Vermont House approved it on a unanimous 11-0 vote.  An observer called this a “tripartisan effort” since there are three parties (Democrats, Republicans, and Progressives) represented on the committee.

The committee under Chairman Warren Kitzmiller (D – Montpelier) worked hard on the bill – last week’s schedule, devoted almost entirely to witnesses on H.248, is a good example of the range of people they heard from. They worked until nearly midnight Thursday before voting on Friday.  The result of all this work was that the bill as reported from Commerce was better than the bill which went in.  Just the way the process is supposed to work. (Unfortunately only the original version of the bill is online now.  Presumably this system will be improved as part of making Vermont an e-state.)

Next week, before the whole House votes on the bill,  the Natural Resources Committee will take a look at proposed regulatory changes.  Obviously any change to environmental regulation should and will get full scrutiny in Vermont. 

It is important that regulatory changes be made as part of this bill or it will not be possible to meet the goal of 100% availability of broadband access and cellular coverage everywhere in Vermont by 2010.  This is a tight schedule recognizing that people without good broadband access are increasingly disenfranchised in an online world; the regulatory changes are aimed at making sure that regulatory oversight is appropriate and timely.

Thinking purely as environmentalist, there’s a lot to like in this bill.  Most important, good communication substitutes for transportation.   Today people are driving downtown for good Internet access; tomorrow they’ll have that at home.  More people’ll be able to work at home; more (but not all meetings) can take place online.  Documents can be transmitted instead of delivered.  When a home is also an office, there is only one space to heat instead of two (cooling’s not much of a problem here).

Current regulation has encouraged a proliferation of very short towers which were built short in order to avoid the expense and uncertainty of hearings which taller towers would have required.  However, each service on a tower (cellular operation, Internet access) must be separated by about ten vertical feet from each other service so the short towers are too short to be shared.  The result is MORE towers have been built than would have been needed if the towers were higher. 

Under current law, communications towers which extend more than 20 feet vertically are subject to development review.  H.248 clarifies and extends this by specifying 20 feet “above the highest point of an attached existing structure” or 50 feet above ground level in the case of a new structure.  Twenty feet above ground level doesn’t make much sense for a tower among the trees!

Also under current law, each tower ends up going through separate environmental review.  This is a very poor way to plan for the maximum coverage with the minimum number of towers.  H.248 says developers of three or more towers may bring an entire plan to the Public Service Board for review at once and sets a schedule within which the PSB must review the application.  It is absolutely essential that review be governed by a predictable timeline!

Of course, the PSB will still reject the application if it doesn’t meet environmental or other criteria.  Some people will argue that the cases should go to the regional commissions set up under Act 250 (Vermont’s landmark measure to regulate development) instead of the PSB.  The very strong counter-argument is that communications are every bit as much a utility as power and ought to be regulated in the same way and under the same criteria of public good (my view).

Probably non-controversial is a provision which requires utilities to allow wireless antennas to be placed on their poles (given safety requirements) similar to the requirement today that they allow cable, telephone, and power wires to be hung from the poles.  Reusing existing poles for this purpose rather than building new towers is an obvious environmental gain.

There is also a provision which allows any homeowner in the state to put a support structure for an antenna on his or her roof so long as the structure is no more than twelve feet above the roofline.  Towns cannot prohibit this.  These tiny antennas (much less unsightly and less bulky than old style TV antennas) are another way to reduce the need for larger antennas and still get universal coverage.  There is one on our roof.


Our neighbors in Stowe point little dishes (below) at it in order to get their Internet access through the local ISP.


There will indubitably be discussion over the fact that the homeowner antenna provision and the review by the PSB pre-empt local zoning.  Again, this is similar to existing law for other utilities and necessary to make sure each town doesn’t decide just to benefit from towers built one town over.  The pockets of population cut off from good communication cut across town boundaries.  It’s both good environmental policy and good social policy to serve these pockets with well and cohesively planned communication facilities.  And to connect them fast.

More on Frequency Regulation – It Matters

Spent the morning immersed in FCC filings on the subject of some of the frequencies which will be freed up in 2009 by the switch to digital TV- 76 to 88 MHz, 174 to 216 MHz, 470 to 608 MHz, and 614 to 698 MHz..  Turns out there’s a lot going on.  How the FCC – and perhaps Congress – handle disposition of these frequencies will be extremely important to US competitiveness in a global economy as well as critically important to better broadband service – particularly but not only in rural areas.

The key issue, which I wrote about some earlier this week, is the disposition of the “whitespace” – should it be available for unlicensed use or auctioned off to licensees? Should mobile device be permitted to use the whitespace frequencies or just fixed devices?

Whitespace consists of:

  • spaces between broadcast channels which used to be needed as a buffer in analog days,

  • frequencies which can’t be used for broadcast TV in particular locations because broadcasting on them would interfere with broadcast in a adjacent locations but could be used by lower-power applications without causing interference,

  • frequencies which aren’t used in particular locations because nobody happens to have a broadcast facility in that location which uses them.

In 2004 The FCC issued a notice of proposed rule making saying that most of the whitespace would be made available for unlicensed use. They got lots of comments; they made no rules.  In October of last year the FCC essentially reopened the question in a further notice of proposed rule making.  There are some new questions in this further notice about how devices in whitespace avoid interfering with licensed signal since the whitespace available is not the same everywhere and, in particular, how mobile devices could detect which frequencies are available for them to use as they move about.  Unfortunately, the presumption that the whitespace will be made available for unlicensed use is weakened in the most recent FCC document.

There are three reasons why it’s important that these frequencies be available on an unlicensed basis: innovation, better broadband availability, and better use of the available frequency spectrum.

In an excellent comment filed with the FCC by a number of organizations including The Consumer Federation of America and Common Cause, the chart below shows how innovation has flourished since frequencies have been opened up for unlicensed use:


Note the flat line of devices being invented to use the licensed frequencies vs. the explosion of devices including WiFi, BlueTooth, and many other technologies we now take for granted in the unlicensed space. We really don’t want to deny ourselves a part in the wave of innovation that can happen on the ex-TV frequencies.

Internet accessibility has exploded thanks to WiFi and the use of other unlicensed radio spectrum for fixed access by WISPs.  This happened even though only “junk” frequencies – those shared with microwave ovens, for example – were made available for unlicensed use.  The former TV frequencies are “good” frequencies.  They go through leaves and walls; they go further.  A common estimate by informed sources is that using the now unlicensed junk frequencies for a wireless buildout requires six to eight times as many towers as would be required if the former TV frequencies could be used.  This is particularly important in rural areas where wireless will be the last mile for many for a long time to come and where there are many leaves to penetrate.  The chart below from dailywireless.org shows some examples:


Finally, unlicensed use is the best way to use the “swiss-cheese” of whitespace which will be available.  Licensees won’t bid much for a frequency available only in one spot or which may later go into use.  On the other hand, the new generation of devices proposed for unlicensed use in these frequencies adaptively use whatever is available wherever they are.  It’s serendipitous that there’s the most whitespace in the same places where there’s the most need for better Internet access.

Two bills have been introduced in the Senate to speed up what seems to be an interminable FCC process.  A bill from Senators John Kerry (D–MA) and  Gordon Smith (R-OR) would require the FCC to allow unlicensed use of this spectrum within 180 days of enactment.  Another bill from John Sununu (R-NH) has a 90 day deadline but allows the FCC to reserve some of the frequencies for licensed use.  Note that if you are automatically sensing unused frequencies you actually can start before 2009 when more frequencies will become available.

The FCC comment period is now over but there is no indication of what action the FCC will take when.  The legislative spurs may well be necessary.

Eventually, I think, almost all frequency will be open (unlicensed).  We need these good frequencies opened now. 

Treatment monitoring and thermometry for therapeutic focused ultrasound

If the title above doesn’t sound like it belongs on Fractals of Change, that’s because it’s from a paper co-authored by son-in-law Hugh Morris which has just been published by the International Journal of Hyperthermia. Last year I blogged about the research Hugh is doing in London on using ultrasound for non-invasive surgery. This paper is an outgrowth of that research.

The technique they’re using to zap cancers is an interesting one: a number of high-frequency sound waves are beamed into the body.  None of the waves by itself has enough energy to do any damage as it passes through skin and other tissue. Aimed right, the beams converge at the site of malignity.  When focused, the beams together have enough energy to heat up bad cells and cause them to die.

The problem Hugh has been working on is how to measure the actual temperature being produced so that treatment can be best calibrated to kill all the bad cells with minimal damage to surrounding tissue. Sticking a thermometer into the patient is one option but this is invasive and also can interfere with the treatment since the thermometer itself may scatter or affect the beams and interaction between the beams and the probe may actually change the temperature you’re trying to monitor.

So it would be better to use MRI or some other non-invasive technique to measure temperature indirectly.  In fact, ultrasound itself can be used to measure the temperature by reporting on tissue changes. But how do you know what MRI or ultrasound reading corresponds to what temperature? How do you know which temperatures are most effective in the first place if you don’t know what temperature you’re operating at?

Hugh has been working on using probes in bovine liver (he buys the livers without the cows) to measure temperature induced and calibrate that with the readings given by non-invasive techniques. The problem he’s had to contend with are that the probes do affect the temperature being measured.  You could correct for that if you only knew how much effect is induced over how much time.

In case you didn’t guess the solution: “Morris et al. proposed a refinement to this [earlier] technique. Instead of assuming an arbitrary time for the end of the first phase [of induced heating] , the time was chosen from analysis of the second differential of the temperature with respect to time…. Morris et al. have also used thin-film thermocouples as a viscous-free reference, and calculated the viscous effect for a wire thermocouple as a function of time by subtracting the TFT measurement from the wire measurement.” Makes sense to me (not really).

What I do understand (because we saw it) is the dedication of young scientists constructing experiments, failing, correcting, trying again, avoiding false positives, questioning, retesting, and (sometimes) coming up with something very exciting.

We’re proud of Hugh.

Internet Alternatives: A Good Beginning

The big Internet news yesterday was almost ignored in all the hullabaloo about Viacom suing GooTube. A coalition of Microsoft, Google, Dell, Hewlett Packard, Intel and Phillips have been urging the FCC to allow frequencies in the 700MHz spectrum which will become available in 2009 to be used for highspeed wireless Internet access.  The news, according to a story in the Washington Post (hat tip to Galeal), is that Microsoft has built a prototype which finds and uses vacant frequencies and the coalition is supposed to have delivered that to the FCC for testing yesterday.

These are much better frequencies for this purpose than the much higher frequencies now used for WiFi and most other wireless Internet services.  These frequencies go through rain, walls, and leaves:  that’s why they were good for TV.  That’s why they’d be great for highspeed Internet access (they don’t go around corners, though).

The FCC has already mandated that all TV go to digital broadcast by 2009. Since digital signal needs far less spectrum than the old analog signal it replaces, many more channels will become available. TV stations can retain some of these channels by using them for new content but others will remain vacant in specific markets.  In rural markets many channels are already vacant.

In the Washington Post: “Several analysts said a TV-spectrum system might make the most sense in rural areas, where high-speed Internet access via phone or cable lines is expensive to deploy. Small companies might build some towers, beam white-space spectrum to farm homes and cabins, and connect it to an Internet provider, they said.”

This could be a big help to Vermont’s e-state plan under which the state will build towers in underserved areas and rent space to WISPs for radios. Assuming legislative approval of the plan, the towers will already be coming online by 2009.  And the Microsoft device or similar ones by competitors will find plenty of unused television frequency here to recycle.

From a national point of view, it is extremely important that we have competition in Internet access beyond the duopoly of telcos and cablecos who have not served us well.  If we had real competition, most of us – urban and rural – would have the kind of broadband speeds available at the kind of prices that our friends in much of developed Europe and Asia enjoy. If we had real competition, we wouldn’t have to think about the dangerous possibility of Internet neutrality legislation.

Because reusing the television spectrum for Internet access DOES threaten the duopoly, Microsoft et al will have much more work to do on the lobbying front than they will on the technical front to make sure this spectrum is available for this use.  It is an understatement to say that this is a telco-friendly FCC.  The good news is that the selfish interests of the tech firms are at odds with the selfish interests of the telco/cableco duopoly; the public may well be the winner in this battle of titans if the powerful telco lobby can be neutralized.

Rich Whitt, Google's telecom and media counsel in Washington, is quoted as saying: “It [the coalition]recognizes that the heart of the problem is a lack of competition on the broadband platform. We're very interested in finding ways to create platforms for other broadband connectivity.”

Ultimately, this is related to the fight between Google and Viacom.  Viacom now buys rights to content from the content creators and packages it into channels for resale. The Internet has made channels obsolete but there is not yet enough Internet bandwidth available in most places to deliver all that content to consumers and much of it is tied up contractually. When that bandwidth does become available – and it will – and as those contracts expire then new mechanisms will develop which allow consumers to purchase exactly that content (or packages of content they want) for Internet delivery. The middleman delivery role will shrink.  The search role will grow.

Ironic but highly appropriate that frequencies (channels) once used for over-the-air TV now be part of the next generation of communication.

E-State Speech at F2C, YouTube

These are video clips from Vermont Governor Jim Douglas's talk at David Isenberg's F2C conference last week.  More clips from other speakers are available.

For those of you not familiar with YouTube, just click on the arrow to play - it's safe.  If you receive Fractals of Change by FeedBlitz email, you may not see the video preview in the post since many email packages block the technique YouTube uses to show a preview.  Just click the title bar in the email to get to the blog itself and then you'll be able to watch the video.

Appropriate, obviously, that this speech should be on YouTube.  And, although this issue is not a partisan one in Vermont, it looks like much partisan politics will be played out on YouTube from now until some even more popular video site comes along.  The hoary tradition of saying one thing in Iowa and another in New Hampshire may be kaput.

Politicians and voters alike will have to get used to the fact that even honest people change their positions over time.  It would be a very bad idea if no one was very allowed to change her or his mind on anything because there is a video on YouTube somewhere of her or him with an earlier position.  We'll have to judge somehow whether flipflops are poll or thought driven - and whether politicians should change their minds on a particular because the voters they represent have changed theirs.

BTW, it's dead simple to put an existing YouTube video on your site. You just copy and paste a snippet of HTML into the web page (all you nerd readers know this already).  Note that, other than the YouTube brand, no advertising appears unless there is some embedded in the video by the creator.  If this isn't something that your existing web site design lets you do without paying an expert, time to think about the design. 

Preparing for Daylight Savings Time in Vermont


You’re The People Whisperer

Mary’s training a puppy.  She’s taking the job very seriously and doing it well. Both of us think that we should have taken as disciplined an approach to managing people in our entrepreneurial days.

The toughest thing for an entrepreneur to learn is that most people want to be led.  The entrepreneur is an entrepreneur to a large degree because he or she doesn’t want to be led (or isn’t capable of accepting direction). So it’s natural to think that other people are the same way: just give them something challenging to do and leave them alone and you’ll get great results – at least if you have good people. Sounds good but it isn’t true.  Such an enlightened approach to leadership is really abdication and is bound to fail.

“Treat people the way you’d like to be treated” is good advice for middle managers who manage other managers. It’s bad advice both for first level supervisors and for CEOs.

Primates, like canines, are herd animals.  Herd animals evolve instincts that allow the herd to function. Many of the instincts are about knowing who is dominant over whom and who takes orders and who gives them. Sure, there are disputes over leadership but rarely misunderstanding about who the leader is at any given time. If you’re going to be a leader, then you’ve got to assume the posture and stature and authority of a leader.  Symbolism is very important.

The puppy wants to put its paw on top of your hand.  Cute but it’s a no-no because the puppy is trying to be top dog and that’s your role. The puppy pulls on its leash; can’t let it do that because you’re supposed to be the leader, not the puppy.

Symbolism without substance is easy to accomplish – that where we get the empty suit from. But substance without symbolism does not a leader make.  There’s a reason why kings wore such elaborate trappings; it’s harder to be a leader in jeans than in ermine robes; but even given that a pompous overdressed ass doesn’t make a good leader for an entrepreneurial high tech firm, you still need to assert leadership both symbolically and substantively in order to make your company successful – and your followers happy and secure. Weak leaders induce anxiety in their followers – revolt comes next.

Even though they probably don’t know they’re doing it, your followers (employees) are constantly looking at you for clues to the strength of your leadership.  In a flat organization you don’t have a court or hierarchy to highlight your importance and you’re directly visible to most of the organization. You have to create your own presence.

In Cesar’s Way, dog whisperer Cesar Milan says that you need a “calm-assertive” manner to lead a dog.  Same thing is true for leading people.  Shouting is appropriate in certain leadership situations such as the deck of a ship in a storm or the din of battle.  It’s usually a sign of weakness in a corporate office (although I have known some bullies who get surprisingly good results). Best is to speak with the calm assurance that you’ll be listened to and obeyed (not a touchy-feely word but what you need to have happen).

When you speak, don’t let yourself be interrupted or shouted down.

Being open to argument is a sign of strength and absolutely necessary if you’re going to get the good advice you need. Nevertheless, it needs to be you, the leader, who decides when there’s been enough discussion and you who make the decision based on the input you’ve gotten – or not. You’re responsible for the decision; you make it.  Believe me, it’s unlikely anyone else around the table wants that responsibility.

When you give someone instructions, have him or her repeat them back to you.  This is necessary to avoid misunderstanding and confusion in any case; but, equally important, reading back the instruction is a symbolic acknowledgement that your leadership is accepted.

Never avoid giving bad news in person. I’ve let subordinates talk me out of delivering news like layoffs personally and it’s always been a mistake. People need to know how to react to bad news; they need to look at you to get the clues on how they should react.

Being a leader is lonely.  Your startup may start as a collaboration; but, if it succeeds, a leader has to emerge or be brought in. If you’re the emergent leader, you’ll find you’re somewhat estranged from your former colleagues. Unfortunately, that’s the way it has to be.  You’ve gotta be top dog when you train a puppy – and when you run a company. The pack expects it.

Skype Prime is the Wave of the Future

Just announced Skype Prime allows you to charge a caller for speaking with you.  All calls start out as free and then go to a paid basis when and if the caller agrees to the rate you want to charge.  Rates can be either on a time basis varying from $.50 to $2.50 per minute or can be anywhere from $.50 to $12.00 per call.  Payment is made with Skype credits and credit balances can be withdrawn via PayPal.  Oh yeah, Skype keeps 30% of the revenue for its pains.

The service is aimed at consultants today.  A commenter on Michael Arrington’s post about the new service predicts, correctly I think, that more than 50% of their revenue in the first year’ll be from phone sex.  That is what happened with 900 service from the old phone companies.  But Skype Prime has potential much greater than that (and phone sex IS a big industry); this service could justify the price that eBay paid for Skype.  This integration of Skype and PayPal may turn out to brilliant, perhaps beyond what eBay even anticipates.  This is your chance to charge telemarketer for calling you!  And they’ll pay.

Here’s the deal: ever since the first phone, phone companies have charged the people who call you for that privilege.  That charge obviously resulted in revenue for the phone company but it also kept down the number of annoying and unwanted calls.  As the price for calls went down, the amount of telemarketing went up.  Nevertheless, marketers ARE willing to pay to reach prospects – after all, that’s what advertising and selling are all about.  Usually the marketer pays some intermediary in order to reach you.

We get paid indirectly today for allowing ourselves to be reached.  We get entertainment in return for watching ads (at least preTiVo).  We get free web content; we get Google searches.  All this paid for by the people who want to reach us.  Sometimes we do get paid directly: listen to the timeshare pitch and get a free lunch or even a night or two somewhere; get a free something in return for giving up your email address.

The world has changed.  If calls begin and end on Skype, no phone company collects termination charges from the caller.  We pay for the network that is used when we pay for out Internet access.   The good part is that the calls are free; up until now the bad part was also that the calls were free.  In theory at least SPIT (Spam over Internet telephony) could become a huge business if Skype numbers were to become public.

Here’s my prediction: many people will set up Skype Prime based call services.  They’ll put information in their profiles which attracts telemarketers.  Telemarketers will learn who the best prospects are both from the profiles (some of which will be lying) and by accumulating lists.  You’ll adjust the rate so that you’re pleased, not annoyed when you get a telemarketing call.  I would have charged a lot less when I was in college – buy me a beer – then I would today; but I was worth less than as a prospect, too.  BTW, the minimum needs to go down and the maximum up but that’ll happen.  Also there needs to be a way to eliminate the free beginning of the call; but that’s a nit.

Before long this’ll spread to email (also provided by eBay?) and instant messaging.  It’s already available for Skype video calls.

On the web, nothing succeeds like disintermediation (and sex).  Marketers always pay to reach prospects.  Prospects often have an inducement to be reached.  What could be simpler than to have the marketers pay us prospects directly?  Good for the marketers; good for the prospects.

Michael Arrington points out that there is already a service called Ether which charges only 15% for this service.  But, as Michael also points out, Ether doesn’t have Skype’s installed base nor does it have PayPal as a corporate sibling.  You need network critical mass to get this going and that is what eBay bought with Skype.

I’m gonna buy some eBay stock.  Probably shouldn’t have told you before the market opens.

I was initially skeptical of eBay’s purchase of Skype.

But I did predict callers getting paid.

Time of Day Electric Pricing Made Me Choose Solar Over Wind

We’ve been debating whether to get alternative energy from solar panels or a windmill.  We’re already on the electric grid so the purpose is to reduce our fossil fuel use and to save on electricity.  Wind seems to make more sense in Vermont because you can almost always see or hear the wind blowing and solar seems to make less sense because the sun is low in the sky much of the year and covered by clouds a good part of the time as well.

Taking off peak pricing into consideration helped us make an economic decision for solar which otherwise would have gone to wind.

Around here electricity goes for around $.15/kilowatt-hour(kwh) as an anytime rate.  Some utilities also offer time of day (TOD) rates which more or less reflect their costs for power at different times.  Peak power generally costs much more than off peak since expensive standby equipment using relatively expensive fuel like natural gas must be fired up to meet peak loads.

The TOD rates which typically complement $.15/kwh anytime rates are $.10/kwh off peak and $.20/kwh on peak. Peak hours are when businesses are open.  In the summer, more power is used in the afternoon than the morning because of increased use of air conditioning.  Therefore weekdays eleven AM to four PM are often the peak periods for billing purposes.

So back to our wind turbine vs. photovoltiac solar cell decision.  Vermont like many states has a net metering law.  If you generate power, you can use it to run your electric meter backwards – in effect, sell it back to the utility.  In some states you can actually earn a check; here you can’t get money back but you can balance your electric bill over a twelve month period.  So each kilowatt-hour, unless you generate too many of them, is worth the same $.15 you would pay to buy it from the utility.

After various rebates and credits, equipment for residential solar costs about $7.00 for each watt of “faceplate” capacity you buy.  At this latitude if the equipment is well-mounted in a good to excellent location, you can expect to generate .9 kilowatt-hours for each watt of faceplate capacity installed.  These numbers mean that the return on your $7 investment is $.14/year (2% return would be easy to beat if you’re in it for the money alone).

Turns out with slightly different calculations and taking into account the fact that wind turbines need more maintenance than solar panels and have a shorter installed life, the return on wind is almost exactly the same at the wind speeds we expect to experience.

But now let’s take into account TOD pricing and assume that we can sell back to the utility at the same TOD rates they would sell to us.  Almost all solar is generated from 9AM through 3PM which is 10AM through 4PM during daylight savings time.  So five hours per week day of solar generation occur during peak rate hours or 25 hours per week out of the total of 42 total solar generating hours.  The average per minute paid for this power would be $.16 at TOD rates.

The wind blows pretty much when it feels like it.  So it isn’t any more likely to blow during the 25 peak hours than other hours of the week.  That means the average payment you’d get for a wind kilowatt-hour would be $.11; not nearly as good as the solar.  It becomes an easy economic decision that get a better return by installing solar than wind if you take peak metering into effect.

Note that this is all a highly theoretical discussion.  It’s not clear (although I’m trying to find out) whether TOD pricing even applies to net metering in Vermont and I certainly don’t know whether it does where you live.  The best ECONOMIC decision right now is just don’t install any alternative capacity.  Incentives may get larger; prices of at least photovoltaic cells are almost certain to come down; even when the price of electricity does get high enough to make this practical, you’ll have gained rather than lost by waiting.  Better to put money into energy efficiency in the meanwhile or even in the bank where you’ll get better than 2%.  Storage heat may make sense with TOD rates; I’ll post on that if and when I know enough to make a spreadsheet.

But, even when making an uneconomic investment decision for personal reasons, the economics of time of day pricing are interesting because they show which alternative gives you the most green for the buck.  When you feed power from a wind turbine into the grid off peak in Vermont, you’re displacing power from Hydro Quebec or Vermont Yankee nuclear;  the hydro power is imported but from our friends; the nuclear fuel is probably domestic; neither generate any greenhouse gasses.  When you generate solar power on peak, you’re helping to avoid spooling up a natural gas turbine.  The natural gas may come from Canada or the US but has a higher likelihood of coming from somewhere less friendly.  And natural gas is a fossil fuel.

Some day, probably not too far in the future, people will be installing alternative generating capacity for good economic reasons.  When they do TOD pricing will be important in helping them make decisions which are both rational for themselves and for the community and economy as a whole.  TOD pricing may be a bargain for you today without any investment, BTW, if you’re not home during the day or are willing to govern your use of electricity by the clock.  For some reason utilities don’t seem to advertise its availability so you may well want to ask.

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